Q What tax benefits do you get from donating a car?
A First, the taxpayer must obtain written acknowledgment from the organization, including details on the use or disposition of vehicle by the organization, and a copy of the acknowledgment, said Tom Fargo, an enrolled agent ? meaning he was certified on his tax knowledge by the IRS ? and member of the Maryland Society of Accountants.
“Beginning in 2006, the IRS established rules for determining the value of a used motor vehicle, boat or airplane donated to a charity,” Fargo said.
The deduction for donating a used vehicle, boat or airplane is limited to the proceeds received from the sale if the organization sells the car at the same value when it was donated.
Fargo said if depreciation or improvement takes place, the deduction is worth the vehicle?s fair market value.
Those limitations don?t apply if the organization sells the vehicle to a needy individual at below fairmarket value, he said.
